Overview of the PPS Final Rule 2011

1. Overview of the PPS Final Rule 2011 William A. Dombi Mary St. Pierre Theresa M. Forster

2. HH PPS 2011 Payment Rates CMS proposal 2.4% Market Basket Index inflation update 1 point MBI reduction (Affordable Care Act required) 2.5% reduction in outlier budget (Affordable Care Act required) 3.79% case mix weight change adjustment in 2011 and 2012 Eliminate hypertension codes from HHRG scoring (estimated 1.78% revenue reduction)

3. HH PPS 2011 Payment Rates CMS Final Rule 2.1% MBI 1 point MBI reduction (Affordable Care Act required) 2.5% reduction in outlier budget (Affordable Care Act required) 3.79% case mix weight change adjustment in 2011 (2012 not finalized) Not applicable to non-routine medical supplies hypertension codes maintained in HHRG scoring

4. HH PPS 2011 Payment Rates Market Basket Index Update Reduced from proposed 2.4 to 2.1 Change due to use of more current data Third quarter 2010 forecast using data through second quarter 2010

5. HH PPS 2011 Payment Rates Outlier Payments Annual outlier budget set at 5% but only with 2.5% spent on outliers (Affordable Care Act) 2.5% shifted from base rates as it was included for one year only in 2010 10 percent provider specific cap on outliers Fixed Dollar Loss ratio remains at 0.67 Purpose of change is to control outlier abuses Outlier spending increased from 2.69%(2004) to 6.59%(2008) of all HH spending

6. HH PPS 2011 Payment Rates Case Mix Weight Change Adjustment CMS still believes that increase from 1.09 average weight to 1.3085 not related to patient change 2012 adjustment not finalized as CMS to re-evaluate its assessment methodology NAHC will propose alternative methodology Risk remains that future reductions/adjustments will be imposed

7. HH PPS 2011 Payment Rates Hypertension CMS proposed to drop from HHRG scoring claiming data showed no connection to resource use NAHC argued that dropping would be a �double-hit� CMS had 3 choices: restore to scoring, eliminate creep adjustment impact, recalibrate all case mix weights Restoration for now�estimated at 1.78% revenue impact More from Mary in a moment

8. HH PPS 2011 Payment Rates $2,312.94 2010 episodic base rate Divided by 0.975 2.5% outlier budget shift X 0.95 Outlier budget X 1.011 Market Basket Index minus 1 point X 0.9621 3.79% case mix case weight change adjustment $2,192.07 2011 Base Episode Rate $2,257.83 2011 Rural Base Episode Rate Minus 2% w/o quality data submission

9. HH PPS 2011 Payment Rates non-rural rural HH Aide $50.42 $51.93 MSS $178.46 $183.81 OT $122.54 $126.22 PT $121.73 $125.38 SN $111.32 $114.66 SLP $132.27 $136.24 These per visit rates are reduced by 2 percentage points if the HHA did not submit quality data.

10. HH PPS 2011 Payment Rates Severity Level Non-Rural NRS Rural NRS Amount 1 $14.18 $14.61 2 $51.18 $52.72 3 $140.34 $144.55 4 $208.51 $214.77 5 $321.53 $331.18 6 $553.00 $569.59 These amounts are reduced by 2 percentage points if the HHA did not submit quality data

11. HH PPS 2011 Payment Rates LUPA ADD-ON $93.31 non-rural $96.11 rural 2% reduction w/o quality data

12. Future HH PPS Payment Rates 2014 rebasing May result in varied rates CMS study on vulnerable populations Case mix weight change adjustment analysis New MedPAC case mix adjustment model in development

13. Co-Morbidities: Hypertension Proposed change: eliminate Unspecified essential hypertension Benign hypertension Assumption: MD inappropriate labeling of pre-hypertensive patients

14. Co-Morbidities: Hypertension Final Rule: Defer removal of hypertension diagnosis codes Conduct research Compare resource utilization Reallocate points for budget neutrality if research does not support resource utilization Entertain suggestions of other policies to prevent up-coding and manipulation of case-mix measures.

15. Co-Morbidities: Hypertension CMS Additional Plan Target providers for review who have Substantive growth in these codes Higher than expected instances of reporting CMS Reference to Diagnosis Guidance Attachment D instruction: only code diagnoses if: Addressed in the HH plan of care, and Affects the patient�s responsiveness to treatment and rehabilitative prognosis. CMS Advisory: Since pre-hypertension not a disease category: Coding 401.1 or 401.9 for pre-hypertensive patients not appropriate

16. Home Health Face-to-Face Encounter: Basis Affordable Care Act: Prior to certifying eligibility, must document Face-to-face encounter with Physician or NPP (NP or CNS in collaboration, PA under supervision of certifying physician) Communicates to physician who certifies May be by telehealth

17. Face-to-Face Encounter: Regulation Face-to-Face encounter as a condition for payment Applies to certification, not recertification Up to 90 days prior to start of care, or Up to 30 days after start of care RAP payment not affected Reason for encounter: related to reason for home care

18. Face-to-Face Encounter: Regulation Encounter by physician ordering services and signing plan of care Physician and NPP Hospitalist to initiate services Who may (or may not) follow patient Expect identification of community physician in discharge plan Update plan by community physician Telehealth Subject to the requirements in section 1834(m) Patient to be located at one of several specified types of originating sites

19. Face-to-Face Encounter: Documentation Documentation of encounter and why: Clinical finding support eligibility Need nursing or therapy Homebound status Separate section or addendum BY PHYSICIAN No standardized language allowed

20. Face-to-Face Encounter: Physician/NPP Employment Stark and anti-kickback rules apply (including exceptions and safe harbors) Physician NPP Prohibition on hiring physicians to perform face-to-face: Medical directors Certifying physicians

21. Face-to-Face: Enforcement CMS eliminated proposal for documentation in physician medical record No plan to use physician claims to validate Responsibility on HHA to ensure encounters occur Instructions planned for contractors to ensure compliance Other program integrity oversight likely

22. Face-to-Face Encounter CMS action plan Educate physicians Manual instructions Clarification needed Impact on payment if encounter outside timelines Hospitalist role Role of other institutional physicians Appropriate beneficiary notice No HHABN

23. Hospice Face-to-Face (F2F) Legislative requirement: On or after Jan. 1, 2011, a hospice physician or nurse practitioner (NP) must have a face-to-face encounter with a patient prior to the 180th day or subsequent recertification Hospice physician/NP must attest to encounter having taken place Origination: 2009 MedPAC recommendation; enacted as part of Affordable Care Act (P.L. 111-148)

24. Hospice F2F Regulatory Changes Regulatory changes effective Jan. 1, 2011: Certification/recertification: -- Time frame set at 15 calendar days -- Must be signed and dated by physician and include benefit period dates to which the cert/recert apply Face �Face/Attestation: -- Encounter with hospice physician/NP for patients whose total stay across all hospices will extend into the 3rd or subsequent benefit period -- Attestation of the encounter includes patient name, date of visit, signed and dated; must be separate and distinct section of or addendum to recertification form; clearly titled and identifiable

25. Hospice F2F Regulatory Changes Face-Face/Attestation: (cont.) -- If NP conducts encounter: must attest that clinical findings were provided to certifying physician -- If physician conducts encounter: should also compose narrative and sign certification -- Face-to-face must be conducted within the 30 calendar days prior to recertification Physician narrative: -- Narrative statement must be directly above physician signature -- Narrative for 3rd or later benefit period must include explanation of why clinical findings from face-to-face support 6 month life expectancy

26. Hospice F2F Regulatory Changes OF NOTE: -- No payment for F2F (administrative); BUT appropriate physician-level services provided in conjunction may be billed through hospice (NP must be attending) -- Encounter may occur in home or at physician office if safe for patient (transport must optimize comfort; cost of special transport covered by hospice per diem) -- Special note: entire time on hospice care applies -- use CWF, patient/representative, HETS 270/271 -- If patient/family refuse face-face, potential for discharge for cause (418.26)

27. Hospice F2F Regulatory Changes -- Physician can be contract, employee or volunteer; medical resident or fellow Ok if employed/contracted (narrative, certification reqs. apply) -- NP must be employee or volunteer (receive W2) so can be FT, PT, per diem -- Prior F2F by other hospice can�t substitute; transfers within benefit period do not require F2F if records verify previous F2F -- No telehealth -- Electronic signatures OK -- Don�t report on claims

28. Therapy Clarifications: Basis Basis for coverage all therapy services (including maintenance and transient conditions) Unique clinical condition of patient Specialized skills, knowledge, and judgment of qualified therapist required

29. Therapy Clarifications: Coverage Criteria Requires that: Qualified therapist assess, establish goals and re-assess patient Measurable treatment goals be described : Plan of care Clinical record Methods used to assess a patient�s function include Objective measurement Successive comparison of measurements There be objective measurement of progress toward goals and/or therapy effectiveness.

30. Therapy Clarifications: Documentation Documentation requirements Evaluation and goals Describe correlation between Treatment for illness/injury to professional standards Measurable goal related to illness/injury Objective measures of function (e.g. swallow, bathing, dressing, walking, stairs, use of devices)

31. Therapy Clarifications: Assessment/Reassessment Professional (qualified) therapist assessment Functional assessment for therapy provided By qualified therapist from each discipline Documentation Results of therapy Effectiveness of therapy (or lack of)

32. Therapy Clarifications: Assessment/Reassessment Qualified therapist (vs. assistant) visits to functionally assess and treat At least every 30 days by each discipline, and On 13th and 19th visit

33. Therapy Clarifications: Assessment/Reassessment 13th and 19th visit exceptions Rural areas or when documented circumstances outside control of therapist, reassess 10th to 13th visit 16th to 19th visit Multiple therapy disciplines On 13th and 19th visits By corresponding therapist during visit closest to 13th and 19th therapy visit Flexibility to avoid added visits

34. Therapy Clarifications: Example CVA patient receiving PT 3x/wk, OT 2x/wk PT initiated January 2nd OT initiated January 3 13th visit on January 18 by qualified PT Qualified OT visit may be January 9 or 12 19th visit on January 26 by qualified OT Qualified PT visit may be January 16 or 18

35. Therapy Clarification: Coverage Coverage criteria for continued therapy (non-maintenance) If lack of progress to goals: therapist and physician determination of continuation Supportable statement to continue therapy and why goals attainable

36. Therapy Clarifications: Coverage Documentation content Assessment of effectiveness related to goals Plan for continuing or discontinuing service Changes to goals or care plan update Objective evidence or statement of expectation of continued progress toward goals

37. Therapy Clarifications: Coverage Assessment Comprehensive assessment not required Limited to functional assessment of deficits as related to plan of care & goals of service CMS developing manual guidance

38. Therapy Clarifications: Coverage Denial of coverage Until qualified therapist Completes assessment and goal measurement Goal attainment/need for revision determined Documentation requirements met

39. Therapy Clarifications: Maintenance Therapy Therapy coverage based on �reasonable expectation of material improvement� Exception: maintenance therapy by qualified therapist Design or establish effective maintenance program Specific to illness or injury Requires skills of therapist Identifies program design, instruction, reevaluation

40. Therapy Clarifications: Agency Action Requirements effective date : April 1, 2011 Identify resources, assessment tools & measures, and protocols Educate clinicians Develop visit mapping strategies Work with software vendors

41. HH CAHPS Dry run: 1 month data 3rd quarter 2010 Continuous full reporting: 4th quarter 2010 & 1st quarter 2011 Exemption (less than 60 eligible pts and new agencies) Exemption and dry run deadlines: January 21, 2011 Failure to participate in CAHPS: market basket minus 2%

42. Notification: Additional Billing Codes New billing HCPCs codes planned as �administrative change� Pre-notification to home health in NPR : July 2010 Implementation planned: January 2011

43. Billing Codes CMS planned code changes (each 15 minutes) G0151: Qualified PT G0152: Qualified OT G0153: Qualified SLP G-Code 1: PTA G-Code 2: OTA G-Code 3: Maintenance therapy by qualified PT G-Code 4: Maintenance therapy by qualified OT G-Code 5: Maintenance therapy by qualified SLP G0154: Skilled licensed nurse G-Code 6: M&E and O&A combined CMS will amend proposal and assign a separate codes for each G-Code 7: Skilled licensed nurse training/education patient or family Consideration for future rulemaking Separate codes for RN versus LPN services

44. �Grouping� Claims by CMS Impetus to CMS proposal: complexity of case-mix and increase in HIPPS code errors CMS solicited comments on: Reporting of code for all OASIS case-mix items on claim Assignment of HIPPS by CMS

45. �Grouping� Claims by CMS CMS response and input: Continue to analyze and resolve problems with capturing secondary diagnoses scores If adopted� Grouper HHRG software will be available to providers and vendors Beta testing will be conducted OASIS corrections handled by claim cancellation and resubmission CMS assigned HIPPS will be: Added to the claim record with online look-up Returned on the electronic remittance advice

46. 36 Months Rule: Ownership Changes Limits sales and acquisitions of HHAs within 36 months of initial Medicare enrollment or within 36 months of certain changes in ownership Medicare billing privileges and provider agreement do not transfer when rule applicable Must reapply to Medicare and pass survey Applies to majority changes in ownership (>50%) Cumulative changes over 36 months Important exceptions

47. 36 Months Rule: Ownership Changes Concerns Addressed in New Rule Corporate reorganizations Acquisitions by experienced companies Death of an owner Lenders/Investors bankruptcy protection Direct vs., Indirect ownership changes Nonprofit companies Effective date

48. 36 Months Rule: Ownership Changes �Change in Majority Ownership� More than 50% direct ownership interest W/in 36 months of initial Medicare enrollment or the 36 months following the most recent change in majority ownership Includes cumulative changes in ownership Includes asset sales, stock transfers, consolidations, or mergers

49. 36 Months Rule: Ownership Changes Exceptions The HHA submitted two consecutive years of full cost reports HHA�s parent company is undergoing an internal restructuring HHA owners changing existing business structure, e.g. LLC to corporation, but owners remain the same Individual owner dies

50. 36 Months Rule: Ownership Changes Important elements Applies only to direct ownership changes Major change in rule�s application CMS will monitor for abuses Equal application to nonprofits Applies to �majority ownership changes� after January 1, 2011 Existing rule applies through December 31, 2010 (100% ownership change; different exceptions) CMS states that it will abide by bankruptcy court order (concern that ownership changes through bankruptcy will trigger rule making HHA worthless)

51. New HHA Capitalization New HHA must satisfy �initial operating reserve funds� requirement or will be denied billing privileges Includes all new provider number HHAs Compliance from the point of application through 3 months following conveyance of billing privileges for the 3 month period thereafter CMS will provide sufficient information to determine capitalization levels and notification when the amount changes Funds can be used during first 3 months of operation